Naira devaluation impasse stalls economic recovery plans

LAGOS, (CAJ News) – ANALSYSTS have warned a lack of clarity around Nigeria’s economic recovery plan could worsen economic problems as international banks withhold funding.
Among the banks that have adopted the wait-and-see attitude is the African
Development Bank (AfDB).
The funds are meant to assist the continent’s biggest economy recover from a decline attributed to the contracting oil industry.
Recently speaking at the World Economic Forum in Davos, AfDB President, Akinwumi Adesina, indicated the financial institution would not release the second tranche of the US$1 billion loan to Nigeria until it has received an economic recovery plan.
It is reported the plan was meant to have been sent to both the AfDB and the World Bank by the end of December but has not yet been done. $600 million was released in November.
“While it is not clear at this stage why the plans have not been submitted, the delays in receiving the funding would be detrimental for the West African economy given that it desperately needs funds to plug the yawning budget deficit and to finance vital infrastructure projects,” Rand Merchant Bank (RMB) warned on Wednesday.
It expects part of the economic reforms will include guidance on how the authorities plan to reform its contentious foreign exchange (FX) policy and ensure a well-functioning market.
RMB noted the Vice President Yemi Osinbajo recently mentioned that the FX market will be ‘unified’ this year but did not paint a clear a picture of how this will be done and, more importantly, when it would be done.
“His comments stand in contradiction to Governor (Godknows) Emefiele who recently reiterated that the currency will not be devalued,” RMB added.
The Central Bank of Nigeria recently told Bureau de Change operators it does not intend to devalue the Naira and will support it at current levels of N305 to the United States Dollar.
– CAJ News